General Growth reorganization for $10.25 billion mortgages approved

New York, Dec. 15 - General Growth Properties, Inc. said it received confirmation from the U.S. Bankruptcy Court for the Southern District of New York on Wednesday for a reorganization plan covering 194 debtors owning 85 regional shopping centers, 15 office properties and three community centers.

In all, the plan covers $10.25 billion of mortgage loans.

The 87 secured loans will be restructured and all undisputed claims of creditors will be paid in full.

The plan extends maturity dates to give an average loan duration of 6.4 years from Jan. 1, 2010. No loans mature before January 2014.

Interest will continue at the current non-default rate, giving a weighted average rate of 5.33%. After amortization of fees, the all-in rate will be 5.51%.

The debtors will emerge from bankruptcy "as soon as practicable," General Growth said in a news release.

Confirmation of plans covering a further 26 debtors owning 10 properties with $1.7 billion of secured mortgage loans has been adjourned until conditions are satisfied, including the receipt of approval from the class B holders or mezzanine holders of those loans. Discussions with this investors are "ongoing," General Growth said.

"Confirmation of these plans of reorganization is a monumental step towards completion of GGP's overall corporate restructuring," said Thomas H. Nolan, Jr., president and chief operating officer of General Growth, in a news release.

"As a result of these plans, completed just eight months after our chapter 11 filing, we have created the foundation for the long term capital structure for GGP and the basis for emerging our remaining debtors from bankruptcy. We are hopeful that we will reach agreements with our remaining secured mortgage lenders expeditiously."

As previously reported, under the plan the secured debtholders have also agreed to waive claims for default interest, late fees, ARD interest and immediate repayment of accelerated principal balances, and, in some instances, waive and consent to pre-bankruptcy events of default under existing loan documents.

In exchange, the company said the plan debtors have agreed to strengthen the bankruptcy remoteness features of their organizational documents; provide automatic relief from the automatic stay under section 362 of the Bankruptcy Code and termination of the extended maturity of the loan in the event of a subsequent bankruptcy event; and strengthen the secured debtholders' consent rights.

The debtors have also agreed to provide parent-level entities non-recourse carve-out guarantees by the ultimate parent of the plan debtors; increase reserves; catch up any unpaid amortization during the Chapter 11 cases upon the plan debtors' emergence; pay increased amortization on all loans; pay a restructuring fee of 100 basis points on the outstanding balance of the loans; and pay a portion of the annual 25 bps special servicing fee on the outstanding balance of the loans.

In addition, the parties have agreed to "most favored nations" treatment for the secured debtholders in connection with modifications to the material economic terms of certain of the debtors' other project-level secured loans.

Under the plan, all undisputed claims against the emerging debtors for pre-bankruptcy goods and services will be paid in full.

Creditor treatment

Creditor treatment will include:

• Holders of administrative expense claims, priority tax claims and secured tax claims will be paid in full in cash;

• Holders of priority non-tax claims, mechanics' lien claims and general unsecured claims will be paid in full in cash with post-bankruptcy interest;

• Holders of other secured claims will either have their claims reinstated, be paid in full in cash or receive the collateral securing the claim;

• Holders of intercompany obligations will either be treated in accordance with secured debt loan documents or will have their claims reinstated; and

• Interests will be reinstated.

General Growth, a Chicago-based real estate investment trust that owns regional shopping malls, master planned community developments and commercial office buildings, filed for bankruptcy on April 16, 2009. Its Chapter 11 case number is 09-11977.

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